Apr 29, 2010

More Lessons From the Deepwater Horizon Disaster

This will initially cost taxpayers
nothing other than the costs of the
coast guard rescue and assistance, which may in the end be charged back
to BP.
Oil companies carry extremely large insurance policies on these rigs for
all kinds of circumstances e.g. hurricanes, sub-sea mud slides, fires,
boat collisions etc.

As for the royalties that would have been paid for the oil, the
fines
that will be charged for the spill to BP by the MMS and EPA will be
several times more than what they would have paid to lease that
particular block from the government.
Out of an estimated 100,000,000 barrels of oil in that resevoir the well
is gushing just over 1,000 barrels a day. At that rate, it would take
over 27 years for all the oil to leak out.
Besides, as I type, BP is planning to drill 2 relief wells that will
plug the current well and they will eventually, probably produce those
wells and pay royalties/lease fees for it.

One of the
issues that investigators will certainly be looking into is
whether this disaster was preventable. The Wall Street Journal
continues
to report reasons that it thinks it might have been, but we'd also
point POGO blog readers to a report recently released by the Government Accountability Office that showed that
the Interior Department struggles to effectively inspect federal
leases — and has for a long time. This is part of a culture that
prioritized production, and it's worth asking whether this oil spill is a
preventable consequence of that culture.

Marcus Baram at Huffington Post has evidence that the agency managing offshore royalty collections, Interior's Minerals
Management Service (MMS), may bear some responsibility for the lack of
preparation for this disaster:

An
MMS official certified that BP "has the capacity to respond, to
the maximum extent practicable, to a worst-case discharge, or a
substantial threat of such a discharge."
But after the explosion, the scale of the accident required BP to
get assistance from the Coast Guard, other federal agencies and other
oil companies such as Shell, which is sending half a dozen vessels to
help with the clean-up effort.